HomeMy WebLinkAboutBLX Group 2011-11-16BLX4>
November 16, 2011
Jane Chambers
City Manager
City of Ukiah
300 Seminary Avenue
Ukiah, CA 95482
Re: $75,060,000
Association of Bay Area Governments
2006 Water and Wastewater Revenue Bonds, Series A
Arbitrage Rebate Compliance Services
Dear Ms. Chambers:
On behalf of BLX Group LLC ("BLX"), formerly known as Bond Logistix LLC, a wholly-owned subsidiary
of Orrick, Herrington & Sutcliffe LLP ("Orrick"), I am pleased to submit this proposal to provide arbitrage
rebate compliance services to the City of Ukiah. As evidenced below, the number and scope of our
engagements, coupled with unmatched technical and regulatory expertise, provides a strong argument for BLX
being the nation's premier provider of arbitrage rebate, yield restriction and related post-issuance compliance
services.
Highlights of our qualifications include:
♦ Technical and Financial Proficiency: BLX numbers 55 finance professionals with a per professional
average of 9 years experience in arbitrage compliance and public finance (senior BLX consultants have an
average of 17 years of experience). In contrast to those that view arbitrage compliance as an after-the-fact
data entry or accounting function, BLX professionals thoroughly understand the legal, economic, and
technical aspects of debt offerings and investment instruments. This expertise allows us to accommodate
even the most unusual and complex circumstances and to apply beneficial analytical alternatives when
available. BLX consultants are recruited from strong educational and occupational backgrounds and undergo
rigorous financial, technical, and regulatory training by nationally recognized experts in these fields.
♦ Tax Regulatory Expertise: Accurately interpreting and applying federal tax laws, rules, and regulations to
arbitrage rebate and most other aspects of municipal borrowings is essential both for avoiding outright errors
and for maximizing "retainable" earnings in what is essentially an after tax investment environment. Orrick,
has been providing quality legal services to municipal issuers, underwriters, and trustees for close to one
hundred (100) years and has been ranked first nationally as bond counsel for most of the last decade. BLX
delivers an Orrick legal opinion with each completed BLX arbitrage report which attests that the analysis
was prepared in accordance with applicable federal tax laws, rules, and regulations.
♦ Relevant Experience: BLX has provided arbitrage compliance services for over 18,800 bond issues since its
origination as Orrick's Financial Services Group in 1989 including preparing over 56,000 comprehensive
analyses since inception. This level of direct and related experience in addition to Orrick's overall public
finance resources, means that (1) BLX seldom encounters circumstances, documents, or investment records
with which we need any substantial help from the Issuer or its counsel or consultants, and (2) BLX is able to
address non-arbitrage opportunities and problems with favorable results.
/BLX Group 777 S Figueroa Street, Suite 3200 Los Angeles, CA 90017 kph. 213-612-2200 f. 213-612-2499/blxgroup.corr
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City of Ukiah
Novembeer 16, 2011
Page 2
♦ Depth of Resources: Supplementing Orrick's tax and BLX's technical resources are the firm's overall
commitments to public finance and outstanding client service. Orrick is a nationally prominent law firm
engaged in the practice of corporate, municipal, and commercial law. Founded in 1863, Orrick presently has
more than 1,100 attorneys and 700 other employees in Los Angeles, Orange County, San Francisco,
Sacramento, Silicon Valley, Pacific Northwest, New York, Washington D.C., Hong Kong, Taipei, Tokyo,
Moscow, London, Paris, Milan, and Rome. Orrick's tax, validity, and other legal opinions are accepted
throughout the country.
♦ Comprehensive Reporting: BLX's arbitrage rebate analyses serve as invaluable review tools to ensure that
an issue is functioning optimally from both economic and overall covenant compliance perspectives.
Our standard services include the following:
1. Verifying that the issue is subject to the Rebate Requirement;
2. Calculating and/or recalculating the bond yield, as appropriate;
3. Identifying, and separately accounting for all "Gross Proceeds" (as that term is defined in the
Internal Revenue Code) of the bond issue, including those requiring allocation analyses due to
"transferred proceeds" and/or "commingled funds" circumstances;
4. Determining what general and/or elective exceptions to the bond issue are applicable;
5. Calculating the bond issue's excess investment earnings (cumulative rebate liability), if any;
6. Delivering appropriate documentation to support all calculations;
7. Providing an executive summary identifying the methodology employed, major assumptions,
conclusions, and any recommendations for changes in record keeping and investment policies;
8. Delivering an Orrick legal opinion stating that rebate liability was determined in accordance with
applicable federal tax law;
9. Providing all IRS filing documentation and instructions, in the event a rebate payment is required.
♦ Competitive Fees: BLX offers its clients industry leading consulting services at competitive prices. Issuers
may pay less to their arbitrage consultant but end up paying considerably more than they saved to the IRS in
unnecessary rebate payments by retaining a less qualified firm to perform their calculations.
Please see Exhibit A, attached hereto, for our proposed fee schedule.
We hope that you will find this proposal informative and responsive to your needs. We believe that BLX's
arbitrage compliance services provide municipal issuers and their financing teams with outstanding quality and
value. Please do not hesitate to call me if I can provide any additional information. Thank you for your
consideration.
Sincerely,
BLX GROUP LLC
114.
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Michelle Chung
Associate Director
(213) 612-2225
mchung@blxgroup.com
BI.XO
EXHIBIT A
BASE FEE
Service
ARBITRAGE REBATE COMPLIANCE SERVICES FEE SCHEDULE
5th-Year Report Fee (per report)
Accepted:
CITY OF UKIAH
By:
Print Name:
Title:
Date:
E-mail:
r
Sane A. Chambers
City Manager
11/21/11
jchambers@cityofukiah.com
City of Ukiah
Novembeer 16, 2011
Page 3
Fee
$3,250
BLX:1000030411.1